Colgate-Palmolive (CL) stock declined more than 2% during the premarket trading, after the toothpaste maker’s second-quarter sales missed analysts’ expectations, primarily due to lower unit volume in emerging markets and flat pricing worldwide. Adjusted earnings, however, came in line with analysts’ consensus.
During the second quarter of 2018, the company’s profits came in at $637 million, or $0.73 per share, up from $524 million, or $0.59 per share during the prior-year period. Adjusted EPS rose 7% to $0.77. Revenues rose 1.5% to $3.89 billion. Organic sales witnessed a marginal growth of 0.5%, mainly due to lower volume growth in emerging markets.
Colgate, which makes products ranging from toothpaste to pet food, reported profit margins of 59.2% when compared to 60.1% during the second quarter of 2017. Adjusted gross margin fell by 140 basis points as higher raw and packaging material costs were partially offset by cost savings from funding-the-growth initiatives.

During the quarter, Latin America that accounts for 24% of the company’s total sales slowed down. Net sales in Latin America fell 7% though it maintained its toothpaste leadership in this region. Organic sales in Latin America inched down 1.5%.
On the other hand, North America, which makes up 21% of the company’s total sales, performed well during the quarter. Sales grew 8% in the region, while organic sales rose 2%.
Looking ahead into fiscal 2018, Colgate-Palmolive expects a year of higher operating cash flow, modestly lower gross margin, higher advertising investment, and mid-single-digit EPS growth. Previously, the company had expected a low double-digit EPS growth for the full year.
Shares of Colgate ended Thursday’s regular trading session up 1.50% at $66.94 on the NYSE and have dropped 11% year-to-date and 8% in the past 52-weeks.
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